Decarbonisation Technology - August 2024 Issue

Scope 3 emissions are typically when most organisations lose track of their carbon impact

is crucial. Even once an accurate prediction of baseline emissions is in hand, it still does not mean that mapping out a decarbonisation strategy will be an easy feat. Could a single carbon accounting system be the answer? Globally, the pace of policy development in support of carbon abatement schemes varies significantly. Currently, the global carbon accounting mechanism sits as a patchwork of different standards and protocols, each stitched together with no cohesive design. Discovering how a company can work these policies to its advantage and ultimately gain better oversight of its carbon footprint will require a proactive approach to decarbonisation. In the EU, the CBAM legislation came into effect this year, covering the import of certain cement, iron, steel, aluminium, fertilisers, electricity, and hydrogen products. It effectively sets a price on the GHG emitted from the production of these products, aligning it with EU GHG reduction goals, preventing ‘carbon leakage’, and levelling the playing field for EU and non-EU producers. Targeting direct and indirect emissions associated with the production of EU-imported goods, the legislation has been hailed by many as a shining example of how to pressure producers into taking immediate action to decarbonise. However, it is becoming increasingly evident that a standardised form of measuring carbon intensity is needed to ensure these policies

remain effective. Today, there is no single means or measure to account for carbon globally. To remedy this, one solution could be to apply actual accounting principles. Much like a ledger item, a ‘carbon item’ could be transferred from one company’s books to another as the carbon makes its way through the full value chain – from source to usage. This method would also enable industry to address and bring transparency to Scope 3 emissions, arguably the most difficult to measure because they encompass the broader supply chain of any organisation. Beyond this, different ISO standards and protocols are used across various sectors, each contributing to the current assumption-based carbon value chain. In addition, the standard or protocol each company and country choose to adopt only furthers the complexity. It is with this reasoning that taking the early initiative to understand carbon emissions is the first step in building an effective decarbonisation model that will work for and with a company. Where does Wood fit in? The journey to decarbonisation is complex, and knowing where to start can be difficult. It is important to apply a structured process to be able to map out how a company’s goals will be achieved and ultimately realised. This rings particularly true for those who are not currently tracking their emissions. To simplify this complex process, Wood created the Decarbonisation SCORE methodology, which